Investors often overlook SEC filings, and it is the job of the 10Q Detective to dig through businesses’ 8-K and 10-Q SEC filings, looking for financial statement ‘soft spots,'(depreciation policies, warranty reserves, and restructuring charges, etc.)that may materially impact Quality of Earnings.

Wednesday, February 03, 2010

McMoran Exploration: What's in Davy Jones' Locker?

Positive drilling results at its Davy Jones prospect could be a boom for McMoran Exploration (MMR-$16.80). The Gulf Coast energy company had proved oil and gas reserves at year-end 2009 totaling 271.9 Bcfe (billion cubic feet of natural gas equivalents), compared with 344.8 Bcfe in 2008. The reserve depletion primarily reflected delays in bringing shut-ins (as a result of the September 2008 hurricanes in the Gulf) back into production. Estimates of the size of the discovery range from 2 trillion to 6 trillion cubic feet of natural gas, rivaling the largest gas finds ever made in the Gulf.

Nonetheless, it is worth reminding folks that assumptions to date have been based on sketchy data from well logs. In addition to appraising the actual hydrocarbons in place, the company still hasn’t defined the extent of the reservoir field or the recoverability of the reserves in the tapped reservoir — its flow rates.

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About Me

Prior to founding the 10Q Detective, I held equity analyst positions with three brokerage firms and published the investment newsletter e-Growth Profit Letter - dedicated to uncovering companies with innovative, proprietary technologies in a range of industries. My work has been published in The Dick Davis Digest, The Bull & Bear Financial Report, BusinessWeek, CBS Interactive, Forbes, Kiplingers Personal Finance, MSN Money, TheStreet.com, 24/7 Wall Street, The Wall St. Journal, The International Herald Tribune, and Investors Business Daily.
The 10Q Detective is recommended as a 'Must-Read' money blog in Kiplingers (Oct. 2006 & May 2008), Washington Post (May 2009); a 'Best of Financial Blog' by BusinessWeek (Feb. 2007 & April 2008),a 'Smart Stop' by The Journal of Accountancy (March 2008); 'Top 25' by Time magazine, a 'Top 50 Money Blog' by CurrencyTrading.net (April 2008); and, a 2011 LexisNexis Business Law Blog Nominee.